The write-up of their labors, “The Value From Investments in Health Information Technology at the U.S. Department of Veterans Affairs,” appeared in the April issue of Health Affairs, a healthcare policy journal.
The CITL researchers concluded taxpayers have shelled out $4.07 billion on the Veterans Health Information Systems and Technology Architecture, or VistA system, and its predecessor, the Decentralized Hospital Computer Program, on which work was first begun back in 1977.
Piecing together VA spending was an unenviable task.
First, VistA is such a monster, having more than 100 modules built around a standard core.
The CITL team, however, worked only on pieces of the beast, focusing on four key VistA subsystems, bar-code medication administration, which the VA pioneered; picture archiving and communication system, or PACS; a laboratory record and interoperability system, and the Computerized Patient Record System, or CPRS, the main EHR system a VA clinician sees and uses to document patient encounters.
CPRS incorporates a Windows-like user interface, computerized physician order entry and a linked clinical decision-support system. Federal spending on CPRS alone was estimated at $3.6 billion, which includes $1.56 billion in early outlays for VistA's precursor DHCP. Bar coding, PACS and labs came in at $470 million.
To come up with these numbers, the CITL researchers report they couldn't simply rely on VA national budgets for technology, since the VA didn't segregate spending on these four main VistA components and also because, over the years, the department combined IT spending for healthcare with IT spending on other VA operations.
CITL sleuths pieced together spending estimates drawing from “many public and internal VA sources,” including “local budget and contract documents,” academic publications and interviews with “health IT developers and managers” who built the system.
Then, using data from healthcare industry sources, CITL researchers compared IT spending levels in the private healthcare sector with spending at the VA for the period 2001 through 2007. They determined the ratio of IT spending at the VA to total healthcare spending, 4.76%, was higher than in the private sector, 3.97%, as was the ratio of IT capital spending to total capital spending, 16.85% vs. 16.44%.
In contrast, however, the VA's ratio of IT capital spending to total spending (1.1%) was lower than in the private sector (1.47%), perhaps explained by the VA's comparatively early adoption of IT.
So, has the public's investment paid off?
The CITL researchers won't say, emphatically, "yes."
"We say in the paper that we were very careful not to draw conclusions about the private sector because the way the VA is structured," said article co-author Colene Byrne, a senior analyst at CITL. "It's a closed system. It's not clear to the extent this would be reproduced in the private sector."
The best Byrne would stand behind is the CITL estimate that the VA has developed a first-rate system, and it appears they've achieved quality improvements and financial benefits.
First, they list six nationally recognized ranking systems for health IT functionality, including the HIMSS Analytics EMR Adoption Model for inpatient systems and a Harvard University-based definition of a “fully functional” EHR for ambulatory care. Then, they compare how both the VistA system and the private sector stack up against those ranking systems.
The VA ranks at or near the top in all six; the private sector, not so much.
In comparison, for example, during the study period, less than 1% of private-sector hospitals ranked as high or higher than the VA at Stage 6 on the HIMSS Analytics model, while its outpatient system scored as high as possible on the Harvard system, having all of the 16 key functions.
Second, the researchers quantified the return on the public investment, concluding taxpayers—and veterans—have received a return on investment, what they describe as “the total net value of the VA's investments in the VistA components modeled.”
They concluded the return on investment to the taxpayers thus far has been $3.09 billion, with an annual return on investment in 2007 alone of $687 million, “threefold greater than annual costs.” The “gross value” of the VA's investment in VistA was estimated at $7.16 billion, according to the report.
The reduction in unnecessary care related to adverse drug events accounted for nearly two-thirds of the gross value, or more than $4.6 billion, according to the report. Eliminated redundancies, such as duplicated laboratory tests, accounted for another 27% of the gross value, or more than $1.9 billion. The rest of the benefits came from reduced work, decreased operating expenses and freed space, the researchers said.
Physician informaticist Stephen Ondra is the senior policy adviser for health affairs at the VA.
According to Ondra, the CITL researchers “reinforced what we have known and tacks a value of investment that was inherently felt, but we never had the data. It's the beginning to put our arms around not only the cost but the return on investment.”
There is a chicken-and-egg situation with calculating return on investment, which is why so many healthcare organizations fail or falter at producing one, Ondra said.
“There has to be a threshold of investment in order to calculate a return on investment,” Ondra said. “If you don't reach that threshold, you can't realize the investment. If you don't get a certain critical mass, you don't get any bang. I think the country is working to build the critical mass to get that return on investment.”
In Ondra's view, perhaps the VA's highest and best role as the nation embarks on a massive, federally subsidized deployment of health IT is as a proof of concept that, when used properly, it really works.
“The VA has helped people understand,” Ondra said. “Look at the improvement in quality at the VA over the last 15 years. People can attribute that to the electronic health record.”
Going forward, Ondra said, the VA will continue to lead in healthcare IT.
“We know we can do this better by bringing the private sector in, and we'll lead by example in helping,” Ondra said. The VA has a pilot project running, connecting VistA to the proposed national health information network.
“We hope within the calendar year of 2012 we'll have a deployment across the VA network to the NHIN. That way we'll have connectivity to any qualified partner across the country,” Ondra said.